A loyalty program provides a consumer with an incentive to conduct a transaction with a consumer payment device. Typically, consumers are rewarded incentives under a loyalty program when they perform transactions with merchants that are participating in the loyalty program. The incentives may typically be redeemed instantly or at a later time.
Many rewards for loyalty programs associated with cards offer “cash back” as a redemption item, which is usually fulfilled either as a check drawn on a bank that is sent to the account holder (such as a cardholder) who may then cash the check. Alternatively, the reward might be in the form of a gift card that can be used by its recipient for future transactions to purchase goods and services. Both of these loyalty program system of rewards are expensive to administer and do not reinforce the value of the relationship between the card, the card holder, and the entity that is issuing the reward to the card holder. Alternatively, some card loyalty programs offer a cash back option, which is fulfilled as a statement credit toward an account of the account holder. However, such a statement credit is not tied to a particular corresponding transaction (such as a corresponding transaction with a particular merchant, a category of merchants, or a particular industry).
Issuers of consumer payment devices (for instance, credit cards) and loyalty program providers would benefit from more cost effective ways of fulfilling cash back rewards or discounts, where the rewards will preferably reinforce the value of the consumer payment device as the earning mechanism. Issuers of consumer payment devices, loyalty program providers, and others (for instance merchants) would thereby benefit from new and innovative ways to deliver rewards or discounts through transactions that can differentiate among particular transactions and merchants, as well as among categories or industry of merchants, card issuers, and other participants.